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Should high domestic value added be policy emphasis in the era of global production sharing?: Evidence from Thailand

Author

Listed:
  • Wannaphong Durongkaveroj

    (Ramkhamhaeng University)

Abstract
This paper examines the current emphasis on the share of domestic value added in exports ('value added ratio') as a policy guidance in trade and industry policy making in developing countries. The hypothesis is that the policy emphasis on value added ratio is inconsistent with the objective of achieving economic development through export-oriented development strategy in the era of global production sharing. The analysis focuses on two indicators of developmental outcomes: the ratio of labor income in total value added and the ratio of wage to profit. The formal empirical analysis adopts Thailand as a case study and employs a mixture of input-output analysis and panel econometrics using the input-output tables of Thailand covering 74 manufacturing sectors for 1990, 1995, 2000, 2005 and 2010. The results suggest that industries characterized by higher value added ratio do not have potential to generate greater developmental outcomes.

Suggested Citation

  • Wannaphong Durongkaveroj, 2021. "Should high domestic value added be policy emphasis in the era of global production sharing?: Evidence from Thailand," Economics Bulletin, AccessEcon, vol. 41(3), pages 1631-1641.
    • Handle: RePEc:ebl:ecbull:eb-21-00078
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2021/Volume41/EB-21-V41-I3-P139.pdf
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    References listed on IDEAS

    as
    1. Kaur, Inderjit & Singh, Nirvikar (ed.), 2014. "The Oxford Handbook of the Economics of the Pacific Rim," OUP Catalogue, Oxford University Press, number 9780199751990.
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    3. Ronald W. Jones, 2000. "Globalization and the Theory of Input Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 026210086x, April.
    4. World Bank, 2020. "World Development Report 2020," World Bank Publications - Books, The World Bank Group, number 32437.
    5. Emilie Daudey & Cecilia Garcia-Penalosa, 2007. "The personal and the factor distributions of income in a cross-section of countries," Journal of Development Studies, Taylor & Francis Journals, vol. 43(5), pages 812-829.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Domestic value added; global production sharing; labor income share; inequality; Thailand;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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